2013-02-06 07:00:03 CET
2013-02-06 07:00:19 CET
REGULATED INFORMATION
Nokian Renkaat - Financial Statement Release
Nokian Tyres plc Financial Statement Bulletin 2012: Strong results and cash flow – a challenging market ahead in early 2013
Nokia, Finland, 2013-02-06 07:00 CET (GLOBE NEWSWIRE) -- Nokian Tyres plc
Financial Statement Bulletin 2012 6 February 2013, 8 a.m.
Nokian Tyres plc Financial Statement Bulletin 2012:
Strong results and cash flow - a challenging market ahead in early 2013
Nokian Tyres group's net sales increased by 10.7% to EUR 1,612.4 million (EUR
1,456.8 million in
2011). Operating profit grew to EUR 415.0 million (EUR 380.1 million). Profit
for the period amounted to EUR 330.9 million (308.9). Earnings per share
increased to EUR 2.52 (EUR 2.39). Cash flow from operations was EUR 262.3
million (EUR 114.1 million). The Board of Directors proposes a dividend of EUR
1.45 (EUR 1.20) per share.
Outlook:
The demand for replacement car tyres in 2013 is expected to grow 1-2% in
Europe, 2% in Nordic countries and 2-5% in Russia. The pricing environment for
2013 is challenging for all tyre categories. Margins, however, will be
supported by easing of raw material costs (€/kg) by 10% in Q1 year-over-year
and 4% full year 2013. Nokian Tyres sales are expected to show growth during
2013 however with a slow start in Q1. Sales in core markets Russia and Nordic
countries are expected to grow whereas sales in Central Europe are expected to
be flat.
Financial guidance:
In 2013, the company is positioned to show some growth in Net sales and
Operating profit. The first quarter Operating profit, however, is expected to
be clearly weaker than in 2012.
Key figures, EUR million
10-12/12 10-12/11 Change% 2012 2011 Change%
Net sales 446.4 482.5 -7.5 1,612.4 1,456.8 10.7
Operating profit 111.8 119.1 -6.1 415.0 380.1 9.2
Profit before tax 104.2 114.8 -9.2 387.7 359.2 8.0
Profit for the period 88.3 94.2 -6.3 330.9 308.9 7.1
Earnings per share, EUR 0.67 0.73 -8.0 2.52 2.39 5.4
Equity ratio, % 71.2 63.2
Cash flow from 552.0 367.3 50.3 262.3 114.1 129.8
operations
RONA,% (roll. 12 months) 23.0 27.0
Gearing, % -4.5 -0.3
Kim Gran, President and CEO:
“In 2012 Nokian Tyres performed well in a challenging environment and recorded
all time high sales and profits combined with excellent cash flow. Our market
position improved in core areas, the company is debt free and we are able to
develop our business further from a healthy position.
We got a flying start to the year 2012 sales and were running full utilization
of our capacities in H1. The weak economic situation in Central Europe combined
with high carry-over inventories in distribution resulted however in a dramatic
drop in demand in CE. Also our sales were hit and growth in CE stalled during
Q3 and Q4. Due to decisive and rapid changes in production, allocating a higher
share of production and sales to Russia and support from reduced costs we
managed to end the year with reasonably good results.
The Russian tyre market continued to grow double digits and also the Nordic
countries were relatively healthy. Despite the challenges in CE we managed to
increase full year car tyre sales volumes, improve sales mix, overall ASP and
to improve our market position. Our car tyre sales in Russia grew at a triple
rate compared to the overall market, further strengthening our market leader
position. In the Nordic countries sales came in as planned, we gained winter
tyre market share and continue to be a clear market leader.
A continued expansion of our distribution network spearheaded by Vianor,
combined with test winning products are cornerstones to our growth. It is again
encouraging that we managed to open 127 new Vianor stores, now totalling 1,037
stores and add three new countries France, Serbia and Bosnia to our network now
operating in 26 countries.
Our new factory in Russia, wall to wall with the previous one, was commissioned
and represents the absolute top in automation, productivity and quality. In
2012 we scored some 6% labour productivity and 11% output improvement in
production despite a harsh market environment. With the new factory up and
running we have presently an inbuilt capability to increase output rapidly
without capex to meet market growth and further to increase output by 50% by
adding lines in Russia.
We are looking into 2013 with confidence. After a slow start for the year in Q1
we expect the market to present us with some growth opportunities. With
overwhelming test wins in 2012, the newly launched next generation of
Hakkapeliitta winter tyres and test winner summer tyres, our product offering
will be by far the best we have ever had. Vianor is to be expanded again by
more than 100 shops and our market geography in Russia and Northern Europe is
looking comparatively healthy offering us a good base for profitable business.”
Market situation
The global economy was characterized by uncertainty and slowing growth in 2012.
Big question marks relating to US fiscal cliff, slower growth in China and
continued problems in Europe reduced confidence and economic activity. The
global GDP grew at approximately 3% in 2012 with the developed economies
growing only moderately and emerging market growth slowing down to less than
6%. The Euro area has been in a recession since spring 2012 and the GDP for the
full year 2012 is estimated to have declined by 0.4% with a start of a
potential recovery postponed to the latter part of 2013. The weak economy had a
clear negative effect on consumer confidence and spending. Sales of new cars
dropped by 8% and the replacement car tyre sales by 13%, winter tyres sell-in
from manufacturers to distribution tumbling down by 18% in Europe.
The problems in the economic environment are hardly solved but some positive
and encouraging signs are starting to emerge. The fiscal cliff has turned into
a fiscal drag and the housing sector is improving giving hope for a 2% GDP
growth in US. Estimates for growth in China are improving with GDP expectations
of 8 % and Europe seems to be stabilizing although at zero growth in 2013.
Consensus expectation is that global economy will turn for the better late 2013
with further improvement in 2014-2015.
Economies in Nokian Tyres' core markets continue to show comparatively stable
development. Annual GDP growth in 2012 averaged 3.6% in Russia and 1% in the
Nordic countries. In 2013 the GDP growth is estimated to be at approximately
same level in these markets.
The new car sales in 2012 in Russia were 2.9 million, up by 11% year-over-year,
with western brands growing 18%. In Russia the new car sales in 2013 are
estimated to reach approximately 3.1 million, up 2-5% versus 2012. Sales of car
tyres increased by approximately 15% in 2012 and growth in 2013 is expected to
continue at a lower rate of 2-5% with winter tyre volumes growing and summer
tyres declining.
In the Nordic countries the new car sales decreased in 2012 by approximately 7%
year-over-year. The sales volume of car tyres showed a decrease of 5% with
winter tyre volumes down 9%. In 2013 car sales are expected to recover slightly
and tyre sales to show some volume growth due to lower inventory in
distribution and pent up demand.
In the autumn 2012 car tyre distributors were left with some summer tyre
carry-over stocks in Central Europe and Russia, which may have a negative
effect on summer tyre sales in H1/2013. There is pricing pressure both in
premium and economy summer tyres in all markets due to the challenging market
situation.
The demand for heavy tyres remains comparatively weak. The demand for forestry
tyres had a downturn in 2012 and is expected to remain soft in 2013. Demand for
mining and earthmoving tyres continue to be reasonably healthy and some growth
for special container handling is expected for 2013.
The demand for premium truck and retreaded tyres in Europe decreased in 2012 by
approximately 19%. The drop in Nordic countries and Russia was clearly more
modest and turned to growth late 2012. At the beginning of 2013 there are signs
of recovery in truck tyre demand. The new truck winter tyre legislation in
Sweden came into effect in the beginning of 2013, which increased the public
awareness throughout Europe on tyres and winter safety.
Tyre industry raw material prices in 2012 decreased during the year from a
historically high level in Q1 to a low in Q4. Tyre industry raw material cost
development was flat in 2012 compared to 2011 but enjoyed a tailwind in Q4
which is expected to continue in 2013. The raw material cost is expected to go
down in H1/2013 versus H1/2012. For the full year 2013 the material cost for
the tyre industry is estimated to decrease by 4% compared to 2012.
October-December 2012
In the fourth quarter Nokian Tyres Group recorded Net sales of EUR 446.4
million (482.5), showing an decrease of 7.5% compared with Q4/2011. In the
Nordic countries sales were down by 1.6%. Sales in Russia increased by 33.7%.
Russia and CIS consolidated sales grew by 37.9%. In Other Europe sales were
down by 47.0% year-over-year. In North America sales increased by 13.8%.
Raw material cost (EUR/kg) in manufacturing decreased in the fourth quarter by
12.2% year-over-year and decreased by 4.1% versus the third quarter of 2012.
Fixed costs amounted to EUR 112.5 million (101.1), accounting for 25.2% (21.0%)
of net sales.
Nokian Tyres Group's Operating profit amounted to EUR 111.8 million (119.1).
The Operating profit was negatively affected by expensed credit losses and
provisions of EUR 0.4 million (4.5) and a bonus of EUR 2.3 million (5.0) for
personnel and management.
Net financial expenses were EUR 7.6 million (4.3). Net interest expenses were
EUR 4.2 million (4.0) including EUR 2.3 million (2.2) in non-cash expenses
related to convertible bonds. Net Financial expenses include EUR 3.3 million
(0.2) of exchange differences of which EUR 2.1 million came from interest
expenses related to RUB currency forwards.
Profit before tax was EUR 104.2 million (114.8). Profit for the period amounted
to EUR 88.3 million (94.2), and EPS were EUR 0.67 (EUR 0.73).
Income financing after the change in working capital, investments and the
disposal of fixed assets (Cash flow from operations) was EUR 552.0 million
(367.3).
January-December 2012
Nokian Tyres Group recorded Net sales of EUR 1,612.4 million (1,456.8), showing
an increase of 10.7% compared with 2011. In the Nordic countries sales
increased by 1.7% representing 34.4% (37.9%) of the group's total sales. Sales
in Russia increased by 49.8%. Russia and CIS consolidated sales grew by 46.2%
and formed 35.1% (26.9%) of the group's total sales. In Other Europe sales were
down by 8.3% year-over-year representing 22.8% (27.8%) of the group's total
sales. In North America sales increased by 10.7% and were 6.9% (6.9%) of the
group's total sales.
Sales of passenger car tyres were up by 13.9% representing 72.1% (69.5%) of the
group's total sales. Heavy tyres' sales decreased by 7.4% and were 6.2% (7.3%)
of the group's total sales. Vianor's sales increased by 5.7% forming 18.6%
(19.4%) of the group's total sales. The sales of Other operations were down by
10.9% representing 3.1% (3.8%) of the group's total sales.
Raw material cost (EUR/kg) in manufacturing increased by 0.4% year-over-year.
Fixed costs amounted to EUR 389.2 million (345.8), accounting for 24.1% (23.7%)
of net sales. Total salaries and wages were EUR 197.1 million (182.4).
Nokian Tyres Group's Operating profit amounted to EUR 415.0 million (380.1).
The Operating profit was negatively affected by the IFRS 2 -compliant option
scheme write-off of EUR 11.8 million (8.1) and expensed credit losses and
provisions of EUR 5.3 million (7.5).
Net financial expenses were EUR 27.3 million (20.9). Net interest expenses were
EUR 15.5 million (14.4) including EUR 9.0 million (8.5) in non-cash expenses
related to convertible bonds. Net Financial expenses include EUR 11.8 million
(6.5) of exchange differences of which EUR 7.2 million came from interest
expenses related to RUB currency forwards.
Profit before tax was EUR 387.7 million (359.2). Profit for the period amounted
to EUR 330.9 million (308.9), and EPS were EUR 2.52 (EUR 2.39).
Return on net assets (RONA, rolling 12 months) was 23.0% (27.0%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (Cash flow from operations) was EUR 262.3 million (114.1).
The Group employed an average of 4,083 (3,866) people, and 4,039 (3,981) at the
end of the period. The equity-owned Vianor tyre chain employed 1,362 (1,370)
people and Russian operations 1,252 (1,062) people at the end of the period.
Financial position on 31 December 2012
Gearing ratio was -4.5% (-0.3%). Interest-bearing net debt amounted to EUR
-65.2 million (-3.6). Equity ratio was 71.2% (63.2%).
Nokian Tyres plc issued a EUR 150 million five-year Eurobond under EUR 500
million Euro Domestic Note Issuance Program on 12th June 2012. The Bond carries
an annual coupon of 3.25%. The Bond will be used for general corporate and
refinancing purposes.
The Group's Interest-bearing liabilities totalled EUR 365.1 million (461.0) of
which Current interest-bearing liabilities amounted to EUR 42.0 million
(253.4). The Average interest rate of interest-bearing liabilities was 4.5%
(5.6%). The Average interest rate of interest-bearing liabilities was 2.3%
(1.8%) with calculatory non-cash expenses related to the convertible bond
eliminated. Cash and cash equivalents amounted to EUR 430.3 million (464.5).
At the end of the review period the company had unused credit limits amounting
to EUR 656.8 million (360.8) of which EUR 306.0 million (305.9) were committed.
The current credit limits and the commercial paper program are used to finance
inventories, trade receivables, subsidiaries in distribution chains and thus
control the typical seasonality in the Group's cash flow due to changes in the
working capital.
Tax rate
In 2012 the Group's Tax rate was 14.7% (14.0%). The Tax rate is affected by tax
relieves in Russia based on present investments and further investment-related
incentive agreements. A new agreement has been completed with authorities in
Russia concerning additional investment in the existing factory and building
the new factory. The agreement will prolong the tax benefits and incentives
until approximately 2020. The estimated Tax rate for the following 5 years is
17%.
The authorities' final approvals of the new factory building in Russia took
place at the end of 2012 and the new agreed tax benefits and incentives came
into force in the beginning of January 2013.
PASSENGER CAR TYRES
10-12/12 10-12/11 Change% 2012 2011 Change%
Net sales, m€ 304.2 338.4 -10.1 1,220.1 1,071.1 13.9
Operating profit, m€ 94.1 103.1 -8.7 410.8 365.1 12.5
Operating profit, % 30.9 30.5 33.7 34.1
RONA,% (roll.12 m.) 32.5 38.3
Net sales of Nokian Passenger Car Tyres totalled EUR 1,220.1 million (1,071.1),
up 13.9% from previous year. Operating profit increased to EUR 410.8 million
(365.1). Operating profit percentage was 33.7% (34.1). Operating Cash flow
increased to EUR 258.4 million (151.9).
Nokian car tyres' sales had a flying start for 2012 supported by strong sales
in Russia and carry-over orders from 2011 in CE. Sales in H2, however,
decreased despite good sales in core markets as the demand in CE turned
exceptionally weak due to carry over inventories in distribution combined with
low consumer sales in CE. The majority of growth in 2012 came from Russia where
sales increased by 49.8%. Sales in other geographies combined were
approximately on par with the previous year with North America up 16%, CIS
excluding Russia up 11%, Nordic countries down 2% and CE down 2%.
Nokian market share improved clearly in premium and mid tyre segments in Russia
as a result of an expanding distribution and high brand awareness. The market
share in winter tyres improved also in the Nordic countries. In Central Europe
the market share improved in north and remained on previous year's level as a
whole. Winter tyres represented 74% (77%) of Nokian car tyres' sales volume in
2012.
A good sales mix together with successful price increases resulted in an ASP
improvement of 5%. Raw material costs were flat year-over-year which combined
with an ASP improvement supported margins.
The new summer tyre range with the spearhead products Nokian Hakka Blue and
Nokian Z G2 won several car magazines' tests in the core markets and in Central
Europe. In October Nokian tyres dominated the winter tyre tests with several
victories in Nordic and Russian car magazines. Also the Central European winter
test results have been a success for Nokian Tyres with test wins in key
markets. A major overhaul of key winter product offering, altogether five new
product ranges, is done in January 2013. The biggest launch ever include the
new generation of studded Hakkapeliitta 8, non-studded Hakkapeliitta R2 and
Hakkapeliitta R2 SUV targeting further growth in core markets. In addition to
the Nordic product range, Nokian Tyres is also introducing two new winter tyres
for the Central European and North American markets: Nokian WR G3 and Nokian WR
SUV 3.
Fixed costs increased in line with sales growth, due to increased marketing in
core markets, especially Russia. The commissioning of the new factory in Russia
and high investments increased depreciation.
Production output (pcs) grew by 11% compared to the previous year, boosted by
the increasing capacity in Russia. Productivity improved along with the
capacity increases, although the production utilization rate was reduced
towards year-end. The shift pattern of the car tyre production in Nokia,
Finland was cut from 7 days/week to a 5 days/week production by the end of Q2,
and further temporary production cuts were made in Q4/2012 and Q1/2013.
Simultaneously the production in Russia has been increased, but the manning of
production line 12 was postponed. The combined output of the Nokia and
Vsevolozhsk plants in 2012 was 15.7 million tyres and the annualized capacity
at year end 18 million pcs with present shift patterns.
The construction and commissioning of the new plant and warehouse next to the
current ones in Russia proceeded as planned on schedule. The first line in the
new plant commenced production in June, and the second line (line 12) will
become on stream in 2013. Capacity in the Russian plant will increase further
with the installation of line 13 during 2013.
In 2013 the focus is to increase sales in core markets with the newly launched
products, to expand distribution further and to improve productivity and
utilization of capacities.
HEAVY TYRES
10-12/12 10-12/11 Change% 2012 2011 Change%
Net sales, m€ 25.9 29.5 -12.3 104.4 112.8 -7.4
Operating profit, m€ 1.4 3.0 -53.0 11.3 17.2 -34.3
Operating profit, % 5.5 10.3 10.8 15.3
RONA,% (roll.12 m.) 12.5 20.5
The Net sales of Nokian Heavy Tyres totalled EUR 104.4 million (112.8), down
by 7.4% year-over-year. Operating profit was EUR 11.3 million (17.2), and the
Operating profit percentage 10.8% (15.3%).
Nokian Heavy Tyres' sales decreased due to a weaker forestry tyre demand and a
slowing down of machine building in Europe compared to 2011. Sales of mining
and radial tyres showed growth both in OEM and replacement markets, especially
in North America and Russia, but did not fully compensate for the decline in
the forestry sector.
ASP improved by 6% due to an improved sales mix combined with price increases
and a higher share of sales to the replacement market.
The production volume (tons) decreased by 13% year-over-year. During 2012 the
production was optimized to match a lower demand from OE customers and to
reduce the inventory level. The results were penalized by the lower utilization
rate and structural changes relating to renewing product specifications
throughout the year. The structural changes are targeted to improve product
quality, flexibility and productivity for 2013. Investments are in progress to
modernize the factory, to open bottlenecks in production and to increase radial
tyre output. The upgrade of the factory will be completed in 2013.
The outlook going into 2013 remains challenging with demand at a comparatively
low level. The focus for 2013 is to increase sales, continue to launch new BAS
products and to optimize production output.
VIANOR
Equity-owned operations
10-12/12 10-12/11 Change% 2012 2011 Change%
Net sales, m€ 121.3 117.3 3.4 315.3 298.4 5.7
Operating profit, m€ 11.8 13.0 -9.5 0.0 2.3 -98.2
Operating profit, % 9.7 11.1 0.0 0.8
RONA, % (roll.12 m.) 0.0 1.4
At the end of 2012 Vianor had 182 (179) equity-owned stores in Finland, Sweden,
Norway, USA, Switzerland and Russia. Vianor's Net sales amounted to EUR 315.3
million (298.4), up by 5.7% compared with 2011. Operating profit was EUR 0.0
million (2.3) and the Operating profit percentage was 0.0% (0.8%).
Vianor succeeded in its strategic task of expanding distribution and setting
market prices for Nokian products and was able to win market shares in a
challenging market situation. The Operating profit was down despite an
improvement in sales due to a decreased share of winter tyres sales and a one
off inventory value correction. Full year sales in tyre retail, truck tyres and
car services showed growth whereas tyre wholesale decreased in line with the
market. Consumer surveys indicate that Vianor increased further its brand
awareness in the Nordic countries.
The gradual change of operating model from tyre sales to full car service in
the stores continues with investments and local acquisitions of car service
shops. In 2012 a total of 25 car service operations were acquired and
integrated to existing Vianor stores which caused some consolidation costs.
In 2013 there are on-going special projects in expanding the network,
developing consumer tyre sales and the car services business, improving the
customer experience further, updating all the processes (Vianor Way) and
renewing the ERP-system.
Franchising and partner operations
Vianor expanded the shop network on Nokian Tyres' key markets by 127 stores
during 2012. At the end of the year the Vianor network comprised of totally
1,037 stores of which 855 were partners. Vianor operates in 26 countries; most
extensively in the Nordic countries, Russia and Ukraine. During the year
France, Serbia and Bosnia-Herzegovina joined as new countries in the network.
Nokian Tyres' market shares improved as a result of the expansion in each
respective country.
Expanding the partner franchise network will continue according to plans; the
target is to have more than 1,150 stores by the end of 2013.
OTHER OPERATIONS
Truck Tyres
In 2012 Net sales for Nokian Truck Tyres and retreading materials were down by
10.9% year-over-year, amounting to EUR 52.9 million (59.3). Operating profit
and cash flow were on a healthy level.
The Truck tyre market was challenging in 2012 in Europe with overall tyre
industry sales down by 19%. In Nordic countries the demand dropped 3%, and in
Russia demand was down by 5%. During Q4 the demand however turned positive due
to increased winter tyre demand and Nokian Truck Tyres booked improved
Operating profit versus the same period in 2011.
In the core markets, Nordic countries and Russia, Nokian Tyres' market share
increased due to an improved product range in both premium and standard tyres.
Premium winter Hakkapeliitta Truck tyres' share of the total Nokian truck tyre
sales increased improving mix and ASP.
At the end of 2012 Nokian Truck Tyres' product inventories were down compared
to a year earlier. The dealers' inventories of truck tyres decreased in the
Nordic countries, which is expected to support sales in 2013. The new truck
winter tyre legislation in Sweden came into effect in the beginning of 2013,
which has throughout Northern Europe increased the public interest about winter
safety of transportation vehicles.
In 2013 the focus will be on increasing sales and improving market shares in
the core markets. Expansion to Russia and CIS utilizing the “Vianor Truck”
service concept will continue.
RUSSIA AND THE CIS COUNTRIES
Nokian Tyres' sales in Russia increased by 33.7% in Q4 and in the full year by
49.8% to EUR 563.0 million (375.8). Sales in CIS countries (excluding Russia)
were EUR 43.7 million (39.3). Consolidated sales in Russia and CIS increased by
46.2% to EUR 606.7 million (415.1).
Sales in Russia grew significantly prompted by a good economic situation and
continued growth in new car sales along with improved production and supply
capacity of Nokian Tyres. Winter tyre sales increased significantly, both in
premium and mid-price segments. Nokian Tyres managed to grow at a triple rate
compared to the overall market, which lead to further improved market shares
and a stronger market leader position in Russia. Payments of customers' trade
receivables and governmental tax incentives came in as planned.
The distribution network was extended by signing additional distribution
agreements and expanding the Vianor network. There were a total of 533 Vianor
stores in 319 cities in Russia and CIS countries at the end of the year. Nokian
Tyres' e-commerce development proceeded according to plans.
The company commissioned a new plant next to the current one in Russia, which
will increase the annual car tyre capacity further by 5-6 million tyres. The
first line in the new plant has commenced production in June, and the second
line (line 12) will become on stream in H1/2013. At the end of 2012 the annual
maximum capacity in the Russian factory was approximately 14 million tyres.
Capacity will increase further as machinery for line 13 will be installed
during 2013. The utilization rate in 2013 will depend on tyre demand.
The Russian economy grew at an estimated real GDP growth of 3.6% in 2012 versus
2011. Consumer confidence was strong and purchasing power improved. Russia is
expected to show a GDP growth of 3-4% in 2013.
New car sales, the main driver for premium tyres, increased by 11% with western
brands growing by 18% compared to 2011. The new car sales were supported by the
moderate credit rates offered by banks (including loans subsidized by car
manufacturers). The sales of used cars were also strong with demand exceeding
supply. The growth rate of new car sales in Russia has been slowing down in
recent months and the sales in 2013 are estimated to be up 2-5% compared to
2012.
Tyre industry deliveries to distributors in Russia increased in 2012 by
approximately 15% year-over-year with western brand sales growing 19%. In 2013
the market potential with good consumer demand for tyres is still there,
although a more moderate sales growth is expected in 2013. However, western
cars that were acquired in large volumes before 2010 are now in need of both
summer and winter replacement tyres.
The Nokian Tyres plant located in Russia inside the customs borders (duty 20%
for imported tyres) combined with strong brands and an expanding Vianor chain
provides a significant competitive edge on the market. By Russia joining WTO,
the tyre duties will go down gradually; duty of car and van tyres will decrease
from 20% to 18% in 2013 and gradually to 10% in 5 years.
INVESTMENTS
Investments in 2012 amounted to EUR 209.2 million (161.7). This comprises of
production investments in the Russian and Finnish factories, moulds for new
products and the Vianor expansion projects. Investments in Russia were EUR 152
million.
OTHER MATTERS
1. Stock options on the NASDAQ OMX Helsinki Stock Exchange
The total number of stock options 2010A is 1,320,000. Each stock option 2010A
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2010A during 1 May 2012 - 31 May 2014. In
the aggregate, the stock options 2010A entitle their holders to subscribe for
1,320,000 shares. The present share subscription price with stock options 2010A
is EUR 16.29/share. The dividends payable annually shall be deducted from the
share subscription price.
The total number of stock options 2007C is 2,250,000. Each stock option 2007C
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2007C during 1 March 2011 - 31 March 2013.
In the aggregate, the stock options 2007C entitle their holders to subscribe
for 2,250,000 shares. The present share subscription price with stock options
2007C is EUR 6.39/share. The dividends payable annually shall be deducted from
the share subscription price.
2. Shares subscribed with option rights
After 14 December 2011 registered new shares a total of 761,322 Nokian Tyres
plc's shares have been subscribed with the 2007B option rights and 125,233 with
the 2007C option rights. These option rights are attached to the Nokian Tyres
plc's Option Programs of 2007. New shares have been registered into the Trade
Register on 21 February 2012. After the subscription the number of Nokian Tyres
plc shares increased to 130,496,395 shares.
After 21 February 2012 registered new shares a total of 1,041,159 Nokian Tyres
plc's shares have been subscribed with the 2007B option rights and 325,172 with
the 2007C option rights. These option rights are attached to the Nokian Tyres
plc's Option Programs of 2007. New shares have been registered into the Trade
Register on 22 May 2012. As a result of the share subscriptions, the number of
Nokian Tyres plc shares increased to 131,862,726 shares.
After 22 May 2012 registered new shares a total of 1,000 Nokian Tyres plc's
shares have been subscribed with the 2007B option rights, 62,636 with the 2007C
option rights and 150 with the 2010A option rights. These option rights are
attached to the Nokian Tyres plc's Option Programs of 2007 and 2010. New shares
have been registered into the Trade Register on 21 August 2012. As a result of
the share subscriptions, the number of Nokian Tyres plc shares increased to
131,926,512 shares.
After 21 August 2012 registered new shares a total of 30,165 Nokian Tyres plc's
shares have been subscribed with the 2007C option rights and 100 with the 2010A
option rights. These option rights are attached to the Nokian Tyres plc's
Option Programs of 2007 and 2010. New shares have been registered into the
Trade Register on 12 November 2012. As a result of the share subscriptions, the
number of Nokian Tyres plc shares increased to 131,956,777 shares.
After 12 November 2012 registered new shares a total of 350 Nokian Tyres plc's
shares have been subscribed with the 2007C option rights. These option rights
are attached to the Nokian Tyres plc's Option Program of 2007. New shares have
been registered into the Trade Register on 17 December 2012. As a result of the
share subscriptions, the number of Nokian Tyres plc shares increased to
131,957,127 shares.
3. Share price development
The Nokian Tyres' share price was EUR 30.10 (EUR 24.88) at the end of the
review period. The volume weighted average share price during the period was
EUR 31.92 (EUR 27.38), the highest EUR 38.20 (EUR 37.45) and the lowest EUR
24.84 (EUR 19.23). A total of 186,898,418 shares were traded during the period
(209,897,339), representing 142% (162%) of the company's overall share capital.
The company's market value at the end of the period amounted EUR 3.972 billion
(EUR 3.225 billion).The company's percentage of Finnish shareholders was 38.9%
(39.8%) and 61.1% (60.2%) were foreign shareholders registered in the nominee
register. This figure includes Bridgestone's ownership of 15.2%.
4. Decisions made at the Annual General Meeting
On 12 April 2012, Nokian Tyres Annual General Meeting accepted the financial
statements for 2011 and discharged the Board of Directors and the President and
CEO from liability.
The meeting decided that a dividend of EUR 1.20 per share shall be paid for the
period ending on 31 December, 2011. The dividend was decided to be paid to
shareholders included in the shareholder list maintained by Euroclear Finland
Ltd on the record date of 17 April 2012. The proposed dividend payment date was
decided to be 3 May 2012.
4.1. Members of the Board of Directors and Auditor
The meeting decided that the Board of Directors has seven members. Kim Gran,
Hille Korhonen, Hannu Penttilä, Benoît Raulin, Aleksey Vlasov and Petteri
Walldén will continue in the Nokian Tyres' Board of Directors. Risto Murto was
elected as a new member of the Board. Authorised public accountants KPMG Oy Ab
continue as auditors.
4.2. Remuneration of the Members of the Board of Directors
The meeting decided that the fee paid to the Chairman of the Board is EUR
80,000 per year, while that paid to Board members is set at EUR 40,000 per
year. With the exception of the President and CEO, members of the Board and the
Nomination and Remuneration Committee are also granted an attendance fee of EUR
600 per meeting.
In addition, 50% of the annual fee be paid in cash and 50% in company shares,
such that in the period from 12 April to 30 April 2012, EUR 40,000 worth of
Nokian Tyres plc shares will be purchased at the stock exchange on behalf of
the Chairman of the Board and EUR 20,000 worth of shares on behalf of each
Board member. This means that the final remuneration paid to Board members is
tied to the company's share performance. No separate compensation will be paid
to the President and CEO for Board work.
4.3. Authorization for a share issue
The Annual General Meeting authorized the Board of Directors to make a decision
to offer no more than 25,000,000 shares through a share issue, or by granting
special rights under chapter 10 section 1 of the Finnish Companies Act that
entitle to shares (including convertible bonds) on one or more occasions. The
Board may decide to issue new shares or shares held by the company. The maximum
number of shares included in the authorization accounts for approximately 19%
of the company's entire share capital.
The authorization includes the right to issue shares or special rights through
private offering, in other words to deviate from the shareholders' pre-emptive
right subject to provisions of the law.
Under the authorization, the Board of Directors will be entitled to decide on
the terms and conditions of a share issue, or the granting of special rights
under chapter 10, section 1 of the Finnish Companies Act, including the
recipients of shares or special rights entitling to shares, and the
compensation to be paid. This authorization was given to be exercised for
purposes determined by the Board of Directors.
The subscription price of new shares shall be recognized under unrestricted
equity reserve. The consideration payable for Company's own shares shall be
recognized under unrestricted equity reserve.
The authorization will be effective for five years from the decision made at
the Annual General Meeting. This authorization invalidates all other Board
authorizations regarding share issues and convertible bonds.
5. Changes in ownership
Nokian Tyres received a notification from JPMorgan Chase & Co on 12 April 2012,
according to which the total ownership of J.P. Morgan Securities Ltd, JPMorgan
Asset Management (UK) Limited, JPMorgan Asset Management (Taiwan) Limited, JP
Morgan Chase Bank National Association and J.P. Morgan Investment Management
Inc. rose to 5.26% of the share capital in Nokian Tyres plc as a result of a
share transaction concluded on 11 April 2012.
Nokian Tyres received a notification from JPMorgan Chase & Co on 18 April 2012,
according to which the total holding of J.P. Morgan Securities Ltd, JPMorgan
Asset Management (UK) Limited, JPMorgan Asset Management (Taiwan) Limited, JP
Morgan Chase Bank National Association and J.P. Morgan Investment Management
Inc. in Nokian Tyres plc fell below 5% as a result of a share transaction
concluded on 17 April 2012.
Nokian Tyres received a notification from Capital Research and Management
Company (CRMC) on 12 July 2012, according to which the total holding of CRMC in
Nokian Tyres plc exceeded 5% as a result of a share transaction concluded on 11
July 2012.
Nokian Tyres received a notification from The Capital Group Companies, Inc. on
5 September 2012, according to which as a result of the corporate
re-organization effective 1 September 2012, the disaggregation exemption
granted by the Finnish Financial Supervisory Authority no longer applies, so
Capital Research and Management Company and Capital Group International Inc.
will no longer report relevant holdings separately. The holdings under
management will be reported in aggregate by the group's parent company, The
Capital Group Companies Inc. The total holding of The Capital Group Companies
Inc. in Nokian Tyres plc was 6.00% after the change in holdings reporting on 3
September 2012.
6. Adjustment measures in the Finnish factory
The statutory negotiations at Nokian Tyres plc Finnish factory ended on 17
December 2012. Improving productivity and adjusting production will be executed
mainly with temporary lay-offs; in addition 28 production workers and officials
were laid off permanently.
The car tyre production will be cut through lay-offs by not more than 42
production days in 2013. Heavy tyre production will be adjusted accordingly by
decreasing production volumes and cutting production days.
7. Corporate social responsibility
Nokian Tyres plc qualified to the OMX GES Sustainability Finland index in
December 2012. The index is designed to provide investors with a liquid,
objective and reliable benchmark for responsible investment. The benchmark
index comprises of the 40 leading NASDAQ OMX Helsinki listed companies in terms
of sustainability. The index criteria are based upon international guidelines
for environmental, social and governance (ESG) issues. The index is calculated
by NASDAQ OMX in cooperation with GES Investment Services.
8. Events after the review period
On 14 January 2013 Nokian Tyres announced that it will renew its winter tyre
range for northern conditions by introducing three new products into the unique
Hakkapeliitta winter tyre family: studded winter tyre Nokian Hakkapeliitta 8
and non-studded winter tyres Nokian Hakkapeliitta R2 and Nokian Hakkapeliitta
R2 SUV. In addition to the Nordic product range, Nokian Tyres is also
introducing two new winter tyres for the Central European and North American
markets: Nokian WR G3 and Nokian WR SUV 3.
Nokian Tyres is introducing the new Hakkapeliitta products to its most
important partners at its own testing centre in Ivalo, Finland in Jan-Feb. In
addition to the launch in Ivalo, the Nordic countries and Russia will have
their own promotional tours. All of the Hakkapeliitta products are aimed at the
company's core markets in the Nordic countries and Russia. Deliveries of the
new products to distribution will start in early 2013.
RISKS, UNCERTAINTY AND DISPUTES IN THE NEAR FUTURE
Based on economic data the Euro area has practically been in a recession since
spring 2012 and the growth for full year 2012 was negative. The development is
however very uneven across the region. European and U.S. debt problems remain
unresolved and the emerging economies' growth is slowing down. These
uncertainties may weaken future demand for tyres. However, Nokian Tyres' core
markets, the Nordic countries and Russia, have relatively healthy economies.
The company's receivables have increased in 2012 in line with the increased
sales and business model. Tyre inventories are on a planned level. The company
follows the development of NWC very closely. At the end of 2012 Russian trade
receivables accounted for 27% of the Groups total trade receivables.
Around 32% of the Group's Net sales in 2013 are estimated to be generated from
Euro-denominated sales. The most important sales currencies in addition to the
Euro are the Russian Rouble, the Swedish and Norwegian Krona, the US Dollar and
the Ukrainian Hryvnia. The widening interest rate difference between the Rouble
and the Euro increased the hedging costs of the Rouble exposure in 2012.
Nokian Tyres' other risks and uncertainty factors relate to the challenging
pricing environment of tyres. The maintaining of profitability in case of
rising raw material prices depends on the company's ability to raise tyre
prices in line with the increasing raw material cost. An efficient ramp-up of
new production lines in Russia will depend on the success of recruiting and
retaining work force in a tightening labour market.
Nokian Tyres Group has no pending disputes or litigations expected to have
material effect on the performance or future outlook of the group.
OUTLOOK FOR 2013
Consensus expectation is that the global economy will turn for the better late
2013 with further improvement in 2014-2015. Economies in Nokian Tyres' core
markets continue to show comparatively stable development. Annual GDP growth in
2013 is estimated at 3-4% in Russia and 1% in the Nordic countries.
The demand for replacement car tyres in 2013 is expected to grow 1-2% in
Europe, 2% in Nordic countries and 2-5% in Russia. The pricing environment for
2013 is challenging for all tyre categories. Margins, however, will be
supported by easing of raw material costs (€/kg) by 10% in Q1 yoy and 4% full
year 2013. Nokian Tyres sales are expected to show growth during 2013 however
with a slow start in Q1. Sales in core markets Russia and Nordic countries are
expected to grow whereas sales in Central Europe are expected to be flat.
Nokian Tyres' growing car tyre production capacity in Russia offers growth
potential, productivity gains, and a moderate growth of fixed costs supports
profitability. Production output in Nokia, Finland has been cut to support
growth of production in Russia.The combined output of the Nokia and Vsevolozhsk
plants in 2012 was 15.7 million tyres and the annualized capacity at year-end
18 million pcs with present shift patterns. Capacity will increase further as
line 13 will be installed in Russia in 2013. The production utilization rate in
2013 will depend on tyre demand.
The demand for heavy tyres remains relatively good for agriculture, mining and
radial tyres but is still soft for forestry tyres. The outlook for Nokian Heavy
Tyres going into 2013 remains challenging with demand at a comparatively low
level. The focus for 2013 is to increase sales, continue to launch new BAS
products and to optimize production output.
Vianor is expected to add more than 100 stores to the retail network and to
reach 1,150 stores, increase sales, develop service business further and to
show a positive operating result in 2013.
A strong position in the core markets, an expanding distribution channel, an
improved cost structure with majority of production inside duty borders of
Russia and CIS combined with new test winner Hakkapeliitta products give Nokian
Tyres a good chance to strengthen its market leadership in the core markets and
to show growth also in the more challenging market environment.
Financial guidance:
In 2013, the company is positioned to show some growth in Net sales and
Operating profit. The first quarter Operating profit, however, is expected to
be clearly weaker than in 2012.
INVESTMENTS IN 2013
Nokian Tyres' budget for total investments in 2013 is EUR 144 million (209.2).
EUR 83 million will be invested in Russia. The balance comprises of investments
in Nokia plant (automation, moulds, ICT, R&D) EUR 44 million, Heavy tyres EUR 6
million and sales companies including Vianor chain with its acquisitions EUR 11
million.
Nokia, 6 February 2013
Nokian Tyres plc, Board of Directors
***
The above-said information contains forward-looking statements relating to
future events or future financial performance of the company. In some cases,
such forward-looking statements can be identified by terminology such as ”may”,
”will”, ”could”, ”expect”, ”anticipate”, ”believe” ”estimate”, ”predict”, or
other comparable terminology. Such statements are based on the current
expectations, known factors, decisions and plans of the management of Nokian
Tyres. Forward-looking statements involve always risks and uncertainties,
because they relate to events and depend on circumstances that may or may not
occur in the future. Future results may thus vary even significantly from the
results expressed in, or implied by, the forward-looking statements.
Nokian Tyres plc
Antti-Jussi Tähtinen, Vice President, Marketing and Communications
Further information: Mr. Kim Gran, President and CEO, tel: +358 10 401 7336
Distribution: NASDAQ OMX, media, www.nokiantyres.com
*****
Nokian Tyres financial statement bulletin 2012 was published on Wednesday 6
February, 2013 at 8.00 a.m. Finnish time.
The result presentation to analysts and media will be held in Hotel Kämp in
Helsinki at 10.00 a.m. Finnish time. The presentation can be listened through
audiocast via internet at http://www.nokiantyres.com/resultinfo2012
To be able to ask questions during the event you can participate in the
conference call. Please dial in 5-10 minutes before the beginning of the event:
+44 (0)20 7162 0077 (UK). Password: 927420.
Stock exchange release and presentation material will be available before the
event from http://www.nokiantyres.com/ir-calendar
After the event the audio recording can be downloaded from the same page.
Nokian Tyres interim report January-March 2013 will be published on Tuesday 30
April, 2013.
Releases and company information can be found from http://www.nokiantyres.com
The whole release can be load from the enclosure or from
http://www.nokiantyres.com
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